NSI May Face More Federal Scrutiny

Network Solutions’ Monday launch of a new Internet business directory is drawing increased scrutiny from the federal government.

NSI’s Dot-Com Directory allows Web users to search for businesses on the Internet. The directory uses data NSI has gathered when businesses register domain names.

A dispute is brewing because NSI has refused to give competitors access to the data. Federal officials are also becoming increasingly concerned over the fact that full-scale competition has yet to come to the domain registration business.

That could bring increased antitrust scrutiny to NSI, which is already the subject of a Department of Justice investigation.

The Commerce Department late Friday formally requested NSI open the data to other companies. House leaders also Friday sent a letter to Commerce Security William Daily characterizing the Dot-Com Directory as “a very troubling development for a company in a monopoly position that already appears very reluctant to give up that position.”

NSI has also been the subject of intense criticism over its decision to refuse to recognize the authority of The Internet Corp. for Assigned Names and Numbers, which is overseeing the transition to domain name competition.

At a hearing last week, NSI was questioned about its reluctance to work with ICANN and its stalemate with the Commerce Department over the database.

Commerce officials say while the Dot-Com Directory is a legitimate product, its proprietary nature appears to be an attempt by NSI to “effectively insulate the Dot-Com Directory against any real competition.”

Many are criticizing the fact that NSI is effectively giving participants in The Dot-Com Directory free domain name registration. The company is charging $119 for a listing, but that includes domain fees. Anyone who registers a domain name with a competitor but wants to be listed in the directory will pay the same $119. NSI currently charges $70 for a domain registration

Joe Sims, ICANN’s attorney, is among those urging the Justice Department to get involved in the dispute. Currently, five companies are participating in a test phase of a competitive domain registration system. Other registrars will not be allowed to open shop until the Commerce Department and NSI agree on terms for opening the business.

Another option of last resort could have the Commerce Department turning the domain registration business over to another company. Officials say they want to avoid that step since it could cause widescale problems.